Nickel hits 7-week high as Philippine news spurs speculators

LONDON, Sept 4 (Reuters) - Nickel prices climbed to their
highest in seven weeks on Thursday as speculators returned to
the market on worries that the Philippines could follow
Indonesia in banning unprocessed ore exports.

Three-month nickel on the London Metal Exchange
soared to a session high of $19,498 a tonne, its strongest since
July 14, driven by buying from commodity trading advisers (CTAs)
and macro funds, traders said.

The metal later pared gains to end at $19,395 a tonne, up
1.7 percent. It is up nearly 40 percent so far this year.

Nickel hit a 27-month peak of $21,625 a tonne in May after
top exporter Indonesia banned unprocessed ore shipments to
stimulate its domestic processing industry.

Prices jumped 2.8 percent on Wednesday on the news that a
Philippine senator had proposed a ban on raw materials exports.

"We've taken away Indonesian nickel ore and if you also take
away Philippines as well, you can wave goodbye to the nickel pig
iron (NPI) industry in China," said Nic Brown, head of
commodities research at Natixis in London. "So this is clearly a
big deal. That's why the market is taking it so seriously."

After nickel's May peak, prices drifted lower and many
speculators closed long positions, but the market is likely to
extend gains as they re-enter the market, Brown said.

"We expected to see prices above $20,000 a tonne at some
point in Q4 going into Q1 next year. But we could get there
rather sooner than we expected and even $25,000 is not
unreasonable if you take Philippine ore out of the equation."

COPPER GAINS

Copper rebounded from two-week lows and other metals also
rose after the European Central Bank cut interest rates to new
record lows to support the stagnating euro zone economy.

More accommodative monetary policy could free up liquidity
for industry and investors, supporting metals prices.

ECB President Mario Draghi said if inflation looked like
staying too low for too long, the ECB Governing Council was
unanimous in its commitment to using other "unconventional
instruments" - a phrase taken as code for printing money as the
U.S. Federal Reserve and Bank of England have.

LME copper closed 0.4 percent higher at $6,930 a
tonne after falling 1 percent in the previous session when it
reached a two-week low of $6,882 a tonne.

Dimming copper's price prospects, however, were mine supply
bottlenecks being cleared and beginning to feed into the market.

Newmont Mining Corp signed a deal with Indonesia
that will allow for the resumption of copper concentrate exports
next week, the head of the firm's local unit said, ending an
eight-month tax dispute.